A **Proof of Capacity** system is a mechanism that regulates the verification of blockchain blocks that are created. This is one of many ways to determine which network participant will create new blocks for the blockchain the following. The method is believed to be especially energy-efficient and resource-efficient and, therefore, accessible to a larger population. With the **PoC** consensus mechanism, participants temporarily supply an amount of storage on their drives in exchange for an incentive.

## Understanding

Proof of capacity was introduced as one of many alternatives to solving the issue of excessive energy consumption within the proof-of-work (PoW) systems and hoarding of cryptocurrency within the proof-of-stake (PoS) system. Proof of capacity permits mining equipment, also known as nodes, in the blockchain system to use free space on their hard drives to mine cryptocurrency.

Instead of changing the **block** header and repeating hashing to find the solution like the PoW technique, PoC works by storing the list of potential solutions in the device's drive before the mining activity begins. The bigger the storage capacity on the device, the more potential solution options one could keep on the drive and the greater chance for a miner to meet the necessary hash value on his list, which means greater chances of winning the mining prize.

To make an analogy to illustrate, if the lottery's rewards depend on the number of numbers that match in the ticket that wins, the player who has an extensive list of options will have a better chance of winning. In addition, the winner can use the block numbers of the lottery ticket repeatedly. Burstcoin is a cryptocurrency that uses an algorithm for proof of capacity. Other coins that utilize it include Storj, Chia, and SpaceMint.

## Working

The proof-of-capacity procedure is two steps that involve the plotting process and mining. Then, the disk is plotted. The list of possible nonce values is created through the repeated hashing process of data, which includes mining accounts. Each nonce has 8192 hashes, number-coded from 0 to 891. The hashes are linked to form "scoops," meaning the adjacent hashes create a pair of. For example, hash 0 and 1 form scoop 0, while hash 2 and 3 form hash 1 and 3, and so on.

The third step is the actual mining process, where a mining worker determines a scoop number. For example, when a miner is beginning the mining process and creates the scoop number 38 and then proceeds to scoop number 38 in nonce 1 and utilizes the data from that scoop to calculate a date. This process repeats for calculating when each deadline applies to the nonce by the miner's drive. After each of the deadlines, the deadline with the shortest deadline is chosen by the mining company.

A deadline is the amount of time in seconds that has to expire since the block was made before a miner can be allowed to create a new block. If no other miners have created a block within this timeframe, the miner can forge a block and then claim the reward for the block. In the example above, when miner X has an initial 36 seconds of a deadline and no other miners can generate the block in the following 36 minutes, X will secure the opportunity to forge the next block and be rewarded.

## Purpose

PoW is among the most popular mining techniques today. This involves mining and using computer resources to perform complex mathematical hash functions. A well-known method of hashing known as"the SHA-256 algorithm is used for Bitcoin. These functions for hashing are one-way functions that have only one possible solution. They require this computing power to pinpoint exactly the input of the function to get the desired output. The hashing function uses "Nonce" in its input variable. The mining process will go through the nonce until they come across the correct hash. This is called brute force computing, which requires effort and time.

Although the PoW algorithm was effective when Bitcoin was still a relatively new technology, the bitcoin network has expanded exponentially. To ensure the timing of blocks is steady, the Bitcoin algorithm is designed to boost mining difficulty. Mining has become so challenging that only the best machines, referred to as ASIC, can do it. To solve ish function, they require lots of computational power. The time and effort invested by every miner who cannot resolve the hash functions quickly are wasted.

In the end, smaller mining operations will have a much smaller influence on important decisions made by larger nodes. Therefore there is a dire requirement for a new mining strategy that consumes less energy than PoW and permits adequate decentralization of networks. This is why Proof-of-Capacity is a key element.